Tesla Slashes Model S and Model X Prices in China to Boost Sales Amidst Growing Competition

Tesla reduced the current inventory prices of its Model S and Model X vehicles in China on Wednesday, aiming to increase sales in the face of heightened competition within one of its key markets.

Tesla announced through a Weibo post, a popular Chinese social media platform, that the Model S is now priced at 836,900 Chinese yuan ($114,677), down from the previous price of 898,900 yuan, the Model X is now available for 754,900 yuan, compared to the earlier price of 808,900 yuan.

The electric car manufacturer, led by billionaire Elon Musk, had earlier rolled out another round of price reductions for its Model Y and Model 3 vehicles in China earlier this week.

Tesla also recently launched cheaper versions of its Model S and Model X vehicles in the United States on Tuesday.

The company continues to focus on gaining market share and boosting its vehicle sales at the expense of profit margins, in the second quarter of 2023, Tesla, under the leadership of renowned billionaire Elon Musk, reported an operating margin of 9.6 percent, the lowest in at least the past five quarters.

However, the ongoing price cuts are raising concerns among investors who fear that profit margins might erode significantly.

Tesla’s consistent price reductions have sparked concerns of a pricing war in the Chinese market, potentially impacting smaller players.

Shares of emerging Chinese electric vehicle companies such as Xpeng, Nio, and Li Auto dipped in early morning trading in the United States.

These price reductions come at a time when the Chinese economy is struggling to regain stable footing after emerging from stringent COVID-19 restrictions, as consumers remain cautious about spending.

In July, Tesla sold 64,285 domestically-made electric vehicles in China, marking a 31 percent drop from the previous month, as reported by the China Passenger Car Association.